Question

What do you understand by common size statement?

Hint:

Common size = proportion-based analysis = useful for inter-firm study.

Answer 1

Step 1: Meaning. In P& L → Sales is base. In Balance Sheet → Total assets/liabilities is base.
Step 2: Purpose. Helps comparison across years and companies of different sizes.
Step 3: Example. If Sales = 1,00,000 and wages = 20,000, then wages = 20% of sales.
Final Answer: \[ \boxed{\text{All items shown as % of base figure}} \] % Quciktip